1. DISCLOSURE REQUIREMENTS AS PER RBI'S MASTER DIRECTION ON FINANCIAL STATEMENTS - PRESENTATION AND DISCLOSURES

Amounts in notes forming part of the financial statements for the year ended March 31,2023 are denominated in Rupees Crore to conform to extant RBI guidelines except, where stated otherwise.

1. CAPITAL1.1 Capital Infusion

During the year ended March, 31,2023 there was no infusion of capital.

Regulatory Capital

The Bank is subject to the Basel III Capital Regulations stipulated by Reserve Bank of India (RBI) effective from April 1, 2013. Transition to the Basel III Capital Regulations was in a phased manner. Bank has to comply with the regulatory limits and minima as prescribed under Basel III capital regulations, on an ongoing basis.

As per the Reserve Bank of India (RBI) guidelines, the total regulatory capital consists of sum of the following;

1) Tier 1 Capital (Going Concern Capital*)

a. Common Equity Tier 1(CET-1)

b. Additional Tier 1

2) Tier-2 Capital (Gone Concern Capital**)

* From Regulatory perspective, Going Concern Capital is the Capital, which can absorb losses without triggering bankruptcy of the Bank.

** From Regulatory perspective, Gone Concern Capital is the Capital, which will absorb losses only in a situation of liquidation of the Bank.

b) Draw down from reserves

The draw down from the reserves for the year ended March 31,2023 are as follows:

1) The Bank has made a drawdown from its revenue reserves amounting to '10.79 crore (Previous year Nil) being the remaining unprovided amount of one fraud account as permitted by the RBI Circular DBR No.BPBC.92/21.04.048/2015-16 dated April 18, 2016.

2) Draw down of ?0.54 crore (previous year ?0.58 crore) from revaluation reserves was made and credited to revenue reserves, being depreciation on the revalued assets.

1.2 ASSET LIABILITY MANAGEMENT

a) Maturity pattern of Assets and Liabilities

Disclosure format of maturity pattern has been revised by RBI vide circular DBR.BRBC.No, 86/21,04,098/2015-16 dated March 23, 2016, In compiling the information of maturity pattern, estimates and assumptions have been made by the management and have been relied upon by the auditors,

The Bank measures and monitors the LCR in line with the Reserve Bank of India's circular dated June 09, 2014 on “Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards” as amended for “Prudential Guidelines on Capital Adequacy and Liquidity Standards” dated March 31, 2015. The LCR guidelines aim to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLAs) that can be converted into cash to meet its liquidity needs for a 30-calendar day time horizon under a significantly severe liquidity stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 of the stress scenario, by which time it is assumed that appropriate corrective actions can be taken. Banks are required to maintain High Quality Liquid Assets of a minimum of 100% of its Net Cash Outflows. The adequacy in the LCR maintenance is an outcome of a conscious strategy of the Bank towards complying with LCR mandate ahead of the stipulated timelines. The maintenance of LCR, both on end of period and on an average basis, has been on account of multiple factors viz., increases in excess SLR, existing eligibility in corporate bond investments, increase in retail deposits and increase in non-callable deposits. Unweighted values are calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows) except where otherwise mentioned in the circular and LCR template. Weighted values are calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates (for inflows and outflows). Board of Directors of the Bank has empowered ALCO (Senior Management Executive Committee) to monitor and strategize the Balance Sheet profile of the Bank.

The Bank has been maintaining HQLA primarily in the form of SLR investments over and above mandatory requirement; Certificate of Deposits issued by Banks with rating A1 and above apart from regulatory dispensation allowed in the form of borrowing limit available through Marginal Standing Facility (MSF) and Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR). Average LCR for the Quarter ended March 31, 2023 is 277.47% (Quarter ended March 31, 2022: 476.49%), which is comfortably above RBI prescribed minimum requirement of 100%.

The Net Stable Funding Ratio (NSFR) is one of Basel Committee's key reforms to promote a more resilient banking sector. The NSFR will require banks to maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities. A sustainable funding structure is intended to reduce the likelihood that disruptions to a bank's regular sources of funding will erode its liquidity position in a way that would increase the risk of its failure and potentially lead to broader systemic stress. The NSFR limits overreliance on short-term wholesale funding, encourages better assessment of funding risk across all on- and off-balance sheet items, and promotes funding stability, The Bank is required to maintain the NSFR on an ongoing basis on a standalone Bank level and on a Group level. The minimum NSFR requirement set out in the RBI guideline for the standalone Bank and for Group effective October 1,2021 is 100%. The Bank has complied with the regulatory requirements with respect to NSFR as of 31 March 2023.

During the year ended March 31st, 2022, the aggregate book value of investments sold from Held to Maturity (HTM) category was within the prescribed limit of 5% (4.83% - Total '113.21 Crores) of the book value of investments held in HTM category at the beginning of the year ('2,341.72 Crores) The market value of investments held in HTM category as on 31st March 2023 was '2,551.36 crores (Previous year '2563.31 Crore) against the book value of '2,651.00 crores. (Previous Year '2600.08 Crore). The Bank has not provided for excess of book value over market value i.e., '99.64 Crores. (Previous Year '36.77 Crore)

In accordance with Reserve Bank of India (RBI) guidelines, sale from, and transfer to/from Held to Maturity (HTM) category excludes;

> One-time transfer of securities to/from HTM category permitted to be undertaken by banks at the beginning of the accounting year with the approval of the Board of Directors;

> Direct sales from HTM for bringing down SLR holdings in HTM category consequent to a downward revision in SLR requirements by RBI.

> Sale to the Reserve Bank of India (RBI) under liquidity management Operations of RBI like Open Market Operation (OMO) and the Government Securities Acquisition Programme (GSAP).

> Repurchase of Government securities by Government of India from Banks under buyback/switch operations.

> Repurchase of state Development loans by respective state governments under buyback/switch operations.

> Additional shifting of securities explicitly permitted by the reserve Bank of India.

i) Capital Reserve

It is the reserve created from Capital profit. Profit on sale of investments in the Held to Maturity category is credited to the Profit and Loss Account and thereafter appropriated to capital reserve (net of taxes and the amount required to be transferred to Statutory Reserves). Amount transferred to Capital Reserve during the year is Nil (Previous year '2.89 Crore).

j) Investment Reserve Account (IRA)

When provisions created on account of depreciation in the 'AFS' or 'HFT' categories are found to be in excess of the required amount in any year, the excess shall be credited to the Profit & Loss Account and an equivalent amount (net of taxes, if any and net of transfer to Statutory Reserves as applicable to such excess provision) shall be appropriated to an IRA. During the year, transfer to Investment Reserve Account is NIL (Previous year '5.92 Crs).

k) Investment Fluctuation Reserve

Investment fluctuation reserve (IFR) is to be created with an amount not less than lower of net profit on sale of investments during the year or net profit for the year less mandatory appropriations until the amount of IFR is at least 2 percent of the HFT and AFS portfolio, on a continuing basis. During the year, Bank has transferred Nil amount (Previous year '7.14 crore) to Investment Fluctuation Reserve Account with a view to building up of adequate reserves to protect against increase in yields in future.

The Bank has compiled the data for the purpose of this disclosure from its internal MIS system and has been furnished by the management, which has been relied upon by the auditors. The above priority sector advance figure is excluding the investment in RIDF with NABARD and other regulators.

c) Overseas assets, NPAs and revenue NIL

d) Particulars of Resolution Plan and Restructuring i) Particulars of Resolution Plan

During the FY 2022-23, the Bank has restructured advances under the following schemes:

• Prudential Framework for Resolution of Stressed Assets issued by RBI vide circular DBR.No.BPBC.45/21.04.048/2018-19 dated June 7, 2019.

• Education Loans under IBA circular No. CIR/RB-ELS/1713 dt.26.12.2016.

• DCCO extension under 'Project under implementation' scheme.

• There were no accounts subjected to restructuring during the year which included an acquisition of shares due to conversion of debt to equity during a restructuring process on account of June 7, 2019 RBI circular.

e) Disclosure of Divergence in the Asset Classification and Provisioning

The divergence observed by RBI for the financial years 2021-22 and 2020-21 in respect of the Bank's asset classification and provisioning under the extant prudential norms on income recognition, asset classification and provisioning are below the regulatory requirement for disclosure and hence the disclosure as required under RBI Master Direction on 'Financial Statements-Presentation and Disclosures' on 'Divergence in the asset classification and provisioning', is not required to be made.

f) Disclosure of transfer of loan exposures

During the year 2022-2023 and previous year 2021-2022:

(i) The Bank has not transferred any Non-Performing Assets (NPAs).

(ii) The Bank has not transferred any special mention accounts (SMA) & Loan not in default.

(iii) The bank has not transferred any loans in default acquired through assignment.

(iv) The Bank has not acquired any loans from SCBs, RRBs, Co-operative Banks, AIFIs, SFBs and NBFCs including Housing Finance Companies (HFCs) or ARCs.

g) Fraud Accounts

RBI vide DoS. CO. FMG. No. S332/23.04.001/2022-23 dtd.13th January, 2023 has advised all member Banks to report all the Digital Payment related Financial Fraud incidents to RBI through FMR, which includes the instances where either the credentials

have been compromised by customers themselves, or no loss has been caused to the Bank. In compliance of the above, Bank has started to reporting all cyber fraud incidents to RBI through FMR, from 1st January 2023 onwards. Out of the total 61 numbers of fraud incidents reported to RBI during the year 2022-2023, 49 numbers are cyber frauds, where frauds had happened due to the compromise of confidential customer credentials by customers themselves/customer negligence and in these cases, there is no loss to the Bank.

Note: RBI Circular DBR. No.BRBC.92/21.04.048/2015-16 dated April 18, 2016 grants banks an option to spread the provisioning for frauds, over a period of four quarters. Bank had exercised this option in respect one account with outstanding balance of '59.40 Crore declared as fraud during Q2 of this financial year, against which provision of '14.85 Crore was held as on the date of declaring the account as fraud. Bank has charged an amount of '33.41Crore to the profit and loss account during the year being 75% of the provision required to be made over and above provision already held as on the date of fraud. Bank recovered '0.35 Crore in the account subsequently, Remaining unprovided amount of '10.79 Crore has now been charged against Revenue Reserve under reserves and surplus and will be charged to the profit and loss account by reversing the charge in Revenue Reserve under reserves and surplus in the next quarter.

e) Factoring Exposures

Bank has no factoring Exposures

f) Intra-Group Exposures

Bank does not have any group entities.

g) Unhedged Foreign Currency Exposure

The Bank has a policy on managing credit risk arising out of foreign currency exposure of its borrowers. In line with the policy, assessment of unhedged foreign currency exposure is a part of assessment of borrowers and is undertaken while proposing limits or at the review stage. The Bank has fixed a maximum limit on unhedged position on borrowers, while sanctioning limits for all clients. The unhedged portion of foreign currency credit exposure of large corporate/SMEs are monitored and reviewed on a monthly basis. Any sanction of fresh loans/adhoc loans/renewal of loans to new/existing borrowers is done after obtaining/sharing necessary information. The Bank also maintains incremental provision towards the unhedged foreign currency exposure of its borrowers in line with the extant RBI guidelines.

The Bank has maintained a provision of '0.12 crore (previous year - 116 crore) and '0.10 Cr (previous year - 105 Cr) on account of unhedged foreign currency exposure of its borrowers as at March 31,2023.

c. Disclosures on risk exposure in derivatives i) Qualitative Disclosure

1. Structure and Organization for Management of risk in derivatives trading: Operations in the Treasury are segregated into three functional areas, namely Front office, Mid office and Back-office, equipped with necessary infrastructure and trained officers, whose responsibilities are well defined. The Bank enters into plain vanilla forward forex contracts only to backup/cover customer transactions as also for proprietary trading purpose. The Bank also enter in to foreign exchange swaps with other banks for hedging own balance sheet items like FCNR/EEFC etc. The Integrated Treasury policy of the Bank clearly lays down the scope of usages, approval process as also the limits like the open position limits, deal size limits and stop loss limits for trading.

The Mid Office is handled by Risk Management Department. Daily report is generated by Risk Management Department for appraisal of the risk profile to the senior management for Asset and Liability management.

2. Scope and nature of risk measurement, risk reporting and risk monitoring systems

Outstanding forward contracts are monitored by Risk Management Department against the limits (Counterparty, Stop Loss, Open Position, VaR, Aggregate Gap) fixed by the Board and approved by RBI (wherever applicable) and exceeding, if any, are reported to the appropriate authority/Board for ratification.

3. Policies for hedging and/or mitigating and strategies and processes for monitoring the continuing effectiveness of hedges/mitigants

The Bank's policy lays down that the transactions with the corporate clients are to be undertaken only after the inherent credit exposures are quantified and approved for customer appropriateness and suitability and necessary documents like ISDA agreements etc. are duly executed. The Bank adopts Current Exposure Method for monitoring the credit exposures. While sanctioning the limits, the competent authority stipulates condition of obtaining collaterals/margin as deemed appropriate. The derivative limits are reviewed periodically along with other credit limits.

4. Accounting policy for recording the hedge and non-hedge transactions, recognition of Income premiums and discounts, valuation of outstanding contracts, provisioning, collateral and credit risk mitigation.

Valuation of outstanding forward contracts are done as per FEDAI guidelines in force. Marked to market profit & loss are taken to Profit & Loss account. MTM profit & loss calculated as per Current Exposure method are taken into account while sanctioning forward contract limits to customers and collaterals/cash margins are prescribed for credit and market risks. The Bank undertakes foreign exchange forward contracts for its customers and hedges them with other banks. The credit exposure on account of forward contracts is also considered while arriving at the total exposure of each customer/borrower and counter party banker. The Bank also deals with other banks in proprietary trading duly adhering to risk limits permitted by RBI, set in the policy and is monitored by mid office. The Marked to Market values are monitored on daily basis for foreign exchange forward contracts. The credit equivalent is computed under current exposure method. The operations are conducted in terms of the policy guidelines issued by Reserve Bank of India from time to time and as approved by the Board of the Bank.

d. Credit Default Swaps

The bank has not undertaken any transactions in Credit Default Swaps (CDS) during the year March 31, 2023 and March 31,2022.

e. OIS (Overnight Index Swap) position

The Bank has not entered into OIS (Overnight Index Swap) during FY 2022-23. The bank had NIL outstanding OIS position at the end of March 2023 and March 2022.

f. Un-hedged/uncovered foreign currency exposure of the Bank

The Bank's foreign currency exposures as at March 31,2023 that are not hedged/covered by either derivative instruments or otherwise are within the Net Overnight Open Position limit (NOOP) and the Aggregate Gap limit, as approved by the Board. NOOP limit is '10.00 Crore and actual position as on March 31,2023 is '2.81 Crore. AGL limit is USD 89 Mio and actual position as on March 31,2023 is USD 17.86 Million.

g. Currency Futures

The Bank does not deal in exchange traded currency futures during the current and previous Financial Years.

*As per the terms of appointment approved by Board of Directors, the Managing Director & CEO is eligible for Variable Pay with cash and non-cash components aggregating to '0.60 Crore in a year upon satisfying specific parameters as per audited figures of the relevant financial year. The actual amount of variable pay can be quantified based on audited figures for FY 2022-23 only,

c. Remuneration to Non-Executive Directors

The non-executive directors are paid remuneration by way of sitting fees for attending the meetings of the Board and Committee, Sitting Fees were paid at the rate of 125,000 for Board Meeting and '15,000 for meetings of the Board Committees till 31,01,2023, The Board at its meeting held on 31,01,2023 has revised the sitting fees of Board and Board Committees to '40,000/- and '30,000/-respectively

d. Priority Sector Lending Certificate (PSLC)

The Bank purchases PSLC for meeting Priority Sector targets. The fee paid for purchase of PSLC is treated as expense.

• There was no sale of PSLC by bank during year ended March 31,2023 and March 31,2022.

• There was purchase of PSLC of '75 Cr. by bank during year ended March 31,2023 and there was purchase of PSLC of '100 Cr. during March 31,2022.

f. Implementation of IFRS converged Indian Accounting Standards (Ind AS)

The Bank has submitted half yearly proforma Ind AS financials with the corresponding comparative financial statements as per the current framework advised by RBI.

In terms of notification DBR.BPBC.No.29/21.07.001/2018-19 dated March 22, 2019, the implementation of Ind AS is deferred until further notice from RBI.

h. Disclosure of facilities granted to directors and their relatives: Not Applicable

i. Amortization of expenditure on account of enhancement in family pension of employees of banks

Reserve Bank of India vide letter dated October 4, 2021 has permitted all member banks of Indian Banks' Association covered under the 11th Bipartite Settlement to amortize the additional liability on account of revision in family pension over a period not exceeding five years, beginning with the Financial Year ended March 31,2022. The bank has recognized the entire additional liability estimated at '14.29 crores and opted to amortize the same over a period of five years beginning with the financial year ended March 31,2022. Accordingly, an amount of '2.86 crores have been written off during the financial year ended March 31,2023 in respect of the said estimated additional liability and the balance amounting to '8.58 crores have been carried forward as unamortized expenditure.

e) Provision for Long Term Contracts

The Bank has a process whereby periodically all long-term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Bank has reviewed and recorded adequate provision as required under any law/ accounting standards for material foreseeable losses on such long-term contracts (including derivative contracts), if any, in the books of account and disclosed the same under the relevant notes in the financial statements.

f) Dues to Micro, Small and Medium Enterprises

There have been no reported cases of delayed payments of the principal amount or interest due thereon to Micro, Small and Medium Enterprises.

h) Investor Education and Protection Fund

There was no pending amount to be transferred to the Investor Education and Protection Fund by the Bank in the FY 2022-23. i. Inter-Bank Participation Certificates with Risk Sharing

There was no purchase or sale of Inter-Bank Participation Certificate with risk sharing by bank during year ended March 31,2023 and March 31,2022.

k. Corporate Social Responsibility (CSR)

Bank has decided to take up the activity of Corporate Social Responsibility (CSR) for the FY 2022-2023 and has been approved for a budget of '0.84 Crore as CSR funds which is 2% of the average net profit achieved by the Bank during the last 3 financial years. Of the approved budget, Bank has spent ?0.20 Crore during the FY 22-23 and an unspent amount of '0.64 Crore is transferred to 'Unspent Corporate Social Responsibility Account' as the same pertains to an ongoing project.

For the financial year 2021-22, an unspent amount of '0.27 Crore was transferred to 'Unspent Corporate Social Responsibility Account' as the same pertains to an ongoing project. From the “Unspent Corporate Social Responsibility Account 2020-21”, Bank has spent '0.03 Crore during the financial year 2022-23 and has carried forward '0.23 Crore for the next financial year.

17. Comparative Figures

Previous year figures have been re-grouped/re-classified wherever considered necessary to conform to current year's classification.

18. Disclosure as to Rule 11(e) of the Companies (Audit and Auditors) Rules, 2014

No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Bank to or in any other person(s) or entity(s), including foreign entities (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the intermediary shall lend or invest in party identified by or on behalf of the Bank (“Ultimate Beneficiaries”). The Bank has not received any fund from any party(s) (Funding Party) with the understanding that the Bank shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Bank (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.